MR. FLEISCHER: The President this morning had his intelligence
briefing, FBI briefing before he left the White House. He just got off
the phone with Prime Minister Sharon of Israel to congratulate him on
his electoral victory. He discussed the importance of working for a
just and lasting peace in the Middle East, recognizing Israel's ongoing
and vital security needs, as well as the importance of the creation of
a Palestinian state that can live side by side with Israel.

We will, later today, have a formal statement by the President on
the victory for Prime Minister Sharon in Israel.

The President will be in Michigan today, where he will participate
in a roundtable on Medicare and prescription drugs. Later he will make
remarks about Medicare and prescription drugs. This will be the first
of additional remarks to come later in greater detail on the importance
of how best to deliver prescription drugs to the nation's seniors.
Today will be much more general.

He'll return to the White House. He will have a photo opportunity
to congratulate the nurse 2002 Nurse of the Year and Nurse Heroes.
That will be a photo release. And that's the highlights.

Q What time is the photo op?

MR. FLEISCHER: The photo op is 3:40 p.m. at the White House. As I
said, photo release. And there will be a background briefing today; a
senior administration official will remain behind on the trip to be
able to answer more in-depth questions about any of the -- there were
six new initiatives announced in the speech last night on the domestic
front, and a senior administration official will remain behind to
answer reporters' questions about those in any greater detail.

Q Ari, the other day the White House released, I think it was a
7-page catalog of Iraqi's -- Iraq's failures to cooperate with
disarmament. I think it was called, "What Disarmament Would Look
Like." Is that the kind of thing that Powell hands to the Security
Council next week, or does he give them new evidence we haven't seen
before?

MR. FLEISCHER: Let me make a couple points about what Secretary
Powell will do at the United Nations next week, as well as where we
stand in the bigger picture about what is coming next vis-a-vis Iraq.
The Secretary's presentation will take a look at what is known about
Saddam Hussein and the threat he presents, and he will connect the
dots. He will go before the Security Council to share with them
information about why this is such a matter of grave concern and why
the peace is threatened by Saddam Hussein's defiance of the United
Nations, and Saddam Hussein's refusal to disarm.

We are now entering the final phase. During this final phase, what
is about to unfold is a diplomatic window -- a diplomatic window. The
President takes seriously the importance of consultations with our
European allies. The President takes seriously the importance of
consulting with the United Nations and the United Nations Security
Council. You will see an increase in meetings and phone calls by the
President. Obviously, the decision the President made to send the
Secretary to New York underscores the importance the President has for
the United Nations Security Council.

This is a diplomatic window. There will be many conversations
taking place at both the presidential and the secretarial level. The
President still believes that if diplomacy results in strong and
powerful expressions of unity towards Saddam Hussein, so that Saddam
Hussein receives as powerful a message as possible that he needs to
disarm, then this can be resolved peacefully.

The President continues to hold out that hope. And that's why he
is launching this effort now through this diplomatic window. If Saddam
Hussein does not get that message, though, there can be no mistaking
the President's resolve that a coalition will disarm Saddam Hussein if
he doesn't do it himself. So that's the phase that we're entering into
now, in this final phase.

Q Does he give new evidence? Does Powell present new evidence
next week?

MR. FLEISCHER: Again, I think that he will, in effect, connect the
dots about what is known. And I'm not going to make any more
predictions beyond that about what the Secretary will say.

Q How long will that window be open, Ari, and what will shut
it?

MR. FLEISCHER: The President has not put a time period on that.
But the President believes that this diplomacy is important because,
one, he believes in consultation, he pledged to do so, and it is, in
his opinion, wise to do so. But, two, he believes earnestly that the
result of this diplomacy should be the world saying to Saddam Hussein,
you need to do what you've been told to do; you need to disarm.

Q Now, you've said -- and the administration has said several
times before that we're in a final phase, the last stage, time is
running out. What's the difference between those statements and what
you're saying here today?

MR. FLEISCHER: Well, again, the President has not put a specific
timetable on it, and therefore, I won't. But you're seeing, I think,
an uptick in the tempo of the seriousness of these discussions. I
think the President's speech last night, in a very cogent way, took the
case directly to the American people, for them to increasingly form
their own conclusions about the risks that Saddam Hussein presents.
And I think that there's a tremendous difference and impact when many
people in Washington talk about Saddam Hussein having 30,000 warheads,
having 30,000 liters of biological weapons, including anthrax and VX,
mustard gas, sarin gas. When Hans Blix says that, it has a very
powerful message. I don't think anything is as powerful as when the
President says that to a country that is increasingly tuned in to hear
this information.

For the country, much of what the President said last night was new
evidence and new information. For others who follow every step of the
debate, they may have other thoughts. But for the country, what they
heard last night I think was powerful and new.

Q There are reports this morning that the President would make
at least two more public speeches on Iraq, if necessary -- one on a
deadline; one on a decision.

MR. FLEISCHER: I don't know where that came from. There are no
plans to do that. And, again, as I've indicated, the President has not
put a timetable on it. If events warrant, the President will inform
you. But the President has not made those determinations.

Q A couple questions on Powell. Is he going to show them
documents at the U.N.? Is he going to show them pictures? Is he going
to show them intercepts, anything specific like that from U.S.
intelligence? Or just list what we think they've got?

MR. FLEISCHER: The purpose of his presentation is to provide as
much as possible without jeopardizing methods or sources. And that
represents careful judgments that have to be made so that information
can be shared and sources and methods can be protected. The President
is sending him there for a reason -- he wants the world to have
information. But I also submit to you, in the President's judgment,
there's already a Mt. Everest of information, high enough to know that
Saddam Hussein has weapons and is willing to use them. From the
President's point of view, making Mt. Everest higher is not necessary
to disarm Saddam Hussein.

Q But you can't say whether he's going to bring the evidence,
itself, or just describe the additional evidence that you plan to
present?

MR. FLEISCHER: I explained to you the process. There's a review
underway of how to both share information and protect sources and
methods. And that review is underway, and we'll know all next week.

Q So you're still not sure exactly what he's going to bring?
You're still working on that?

MR. FLEISCHER: Of course, the speech is six days away.

Q One other question --

MR. FLEISCHER: Seven days away.

Q One other question -- is Powell going to be asking for
something? Is he going to be asking for another resolution?

MR. FLEISCHER: I want to defer on many of these questions until
next week.

Q But it will be newly-declassified information?

MR. FLEISCHER: I didn't say that. I didn't say it wouldn't be,
but I didn't say it would. There's a process underway, and, with all
due respect, it's important -- it's a serious process, and it's
important to let it unfold.

Q Administration officials had explained before, in the past,
that one of the reasons why some of this information hadn't been made
public was that it would be more useful to keep it sort of quiet, for
if we had to go to war, you would want that information, that
intelligence to be used in the event of military action. It would be
more useful there. What has changed about that concern, and is it just
the sense that finally the President is agreeing that more people are
demanding more information, they want more information, and finally
that need is overtaking the concerns about reserving that intelligence
for use in a military conflict?

MR. FLEISCHER: These are valid issues that you point to, and this
is why this is a serious process, to walk through information bit by
bit to determine how much can be shared, what can be shared, at what
level it can be shared, but at the same time, not jeopardize the
sources or methods that, one, help us now to collect information, or
two, may be helpful down the road if necessary. So that's a part of
the equation.

Q But what changed that decision? I mean, the calculation on --

MR. FLEISCHER: Nothing changed it. It's still the part of the
review that's underway. But the President has always said that it's
important to consult. Consultations include passing along information.
That's always a part of the process. The level of information and the
way to protect sources and methods is part of what will unfold over the
next little while.

Q A couple questions about Medicare. I know more details will
be coming later, but when the President said last night that he had
proposed $400 billion -- how much of that is for drug benefits, per se,
versus for provider payments or other efforts to modernize the
program?

MR. FLEISCHER: Well, there will be more specifics to follow later,
but clearly, prescription drugs is he most costly of all of these
elements.

Q Can you say what portion of the $400 billion would go to
drugs?

MR. FLEISCHER: No, it would be premature, until all -- Medicare,
as you know well, Amy, is one of the ost complicated policy issues; it
has a lot of different moving parts. And that's why I indicated this
will e a generalized speech today. But it's also a sign of, right
after the State of the Union, the President is launching a domestic
agenda and sending a message by making this his first priority of the
State of the Union that he is serious. He wants Congress to make it a
priority. It's been an issue that Congresses have talked about forever
and not got anything done. He thinks this can be, and should be, the
year to get it done.

And I think one of the things you'll hear about -- and this is one
of the most exciting developments in health care that Medicare has
lagged in, and the President alluded to it last night when he talked
about choices and options just like members of Congress and their
staffs have, through what's called the Federal Employee Health Benefit
Plan, the FEHBP.

I'd recommend to all of you, take a look at that plan. Some argue
-- some partisans argue -- and I do have to say I've seen some news
reports that simply assert as a matter of fact, not as an issue of
allegation, that under the Bush plan, the only way to get prescription
drugs is to join an HMO. Familiarize yourselves with the FEHBP. That
is categorically a wrong assertion. And I just urge all reporters to
use independent judgment before just saying that under the Bush plan,
the only way to get it is to join an HMO.

The President believes in choices and options. Members of Congress
have choices and options. And one interesting tidbit or statistic for
you -- 93 members of Congress are 65 and older; one-third of the Senate
is on Medicare; one-third of the Senate is 65 and older. While they
have Medicare as their first provider payment, they also have the FEHBP
as their backup, which is an interesting reflection on how many
senators and congressmen rely on a private option for their health
care.

Q That is managed care, though, isn't it?

MR. FLEISCHER: Good question, I'm glad you asked that. No, it is
not managed care. FEHBP is a series of options and choices that
includes -- includes -- fee-for-service. Typically that's
administrated by Blue Cross/Blue Shield as a traditional
fee-for-service plan. It includes managed care; it includes PPOs; it
includes a number -- a number -- of options, the key being there, it
includes fee-for-service. It's a substantive matter.

Q If beneficiaries chose to stay in traditional Medicare, the
existing fee-for-service program, could they then get the new drug
benefit?

MR. FLEISCHER: Under the plan that the President will discuss,
seniors will be able to have a choice of options, including no changes
to their Medicare, and including, under his new vision of Medicare,
choices and options, all of which are paid for with the government's
help so that seniors remain, with government support, eligible for a
Medicare program that gives them choices and options, including
prescription drugs.

Q But you're not exactly saying that the existing
fee-for-service program would begin to include drug coverage.

MR. FLEISCHER: It's an expansion of the current Medicare system to
include choices and options that get them prescription drugs.

Q Why Michigan today, and who is in the audience for the
speech?

MR. FLEISCHER: The audience for the speech -- I'm not sure I
brought it with me. Do you have that?

Q Likewise for roundtable.

MR. DICKENS: No, but I'll find out. I don't have it.

MR. FLEISCHER: We'll get that for you.

Q Why the state of Michigan today?

MR. FLEISCHER: I don't think there's any one reason or another.
The President, when he travels, travels to areas that are reachable
within a day trip from the White House, when he's here, obviously. But
health care is an important issue everywhere, it's an important issue
in Michigan.

Q -- mention the affirmative action case today?

MR. FLEISCHER: Today's speech is about Medicare.

Q On this new intelligence gathering agency that the President
announced, how is this going to work? Is George Tenet going to head
it? And is it going to allow the possibility for FBI domestic
intelligence gathering to be funneled through the CIA? Is that
essentially what we're talking?

MR. FLEISCHER: One, yes, it does report to the DCI, the Director
of Central Intelligence. Two, it is an analytical unit. It is not a
collection unit, which is something else I saw in one of the papers
this morning, that reported that it would both collect and analyze. It
would not collect. Collecting remains an area that other agencies do.
The CIA does it. Interestingly, Homeland Security has the ability on
its own to collect information, because, of course, they have Coast
Guard as part of them, TSA as part of them, Secret Service as part of
them.

All those entities, of course, have their own collection abilities.
DOD has collection. The purpose of this is to provide deeper and
greater cooperation among a variety of agencies, principally FBI, CIA,
DOD and Homeland and the analysis of information. And I'll give you an
example.

Let's say the CIA picks up a report from foreign assets that in a
foreign country people that we believe or know to be terrorists are
involved in a plot to spread ricin. Concurrently, the FBI, through its
domestic reporting, picks up a report and collects information that
there is -- there are people that we believe to be associated with an
al Qaeda terrorist cell who are involved in something that has castor
beans which is a precursor to the development of the poison risen. By
having one analytical unit, the solution to this can be found both on
the domestic front and the foreign front. It minimizes the risks that
the CIA would see this as a foreign issue to be dealt with in a foreign
matter because they pick up a report that's a foreign country that is
developing the ricin, while the FBI collects information with domestic
involvement.

The best way to tie the foreign to the domestic is to have the
analyst looking at the same informationat the same time, and therefore,
to determine whether or not counter efforts need to be focused on both
domestically and foreign, as opposed to just one or the other. That's
the best way to wrap up a threat and to stop a threat, is to focus on
the threat in its entirety, whether it's foreign or domestic. That's
an example of how tying the analysis together binds the agencies deeper
and better in the analysis of what the information means.

Q -- said this morning, though, that this new group can sort of
task intelligence gathering. I mean, it wouldn't be done by them, but
they could say we need more on X, or go do that. Is that right, that
they could do an affirmative kind of --

MR. FLEISCHER: Correct, they can talk to the agencies about it,
and say, our analysis indicates that additional information is needed;
can you obtain this, can you obtain that.

Q So they could tell the FBI, go try to obtain X.

MR. FLEISCHER: That's correct. But the FBI or the CIA would do
the collecting. So, in other words, they're not operational, they're
analytical.

Q On Medicare, can I just come to Amy's question one more
time. You are not saying that the President is willing to let people
stay in fee-for-service and still get the drug benefit. You're not
saying that, correct?

MR. FLEISCHER: You can still get -- under the President's
proposal, under Medicare, you will be in Medicare and you will have
access to prescription drugs through a fee-for-service program.

Q Do you have to pay extra for that?

MR. FLEISCHER: The cost structure will be very parallel to what
you see today, where seniors pay for prescription drugs. Of course,
all seniors, under the President's proposal, will have government help,
will have a government subsidy. All seniors.

Q Has the President decided on the elements of the plan, or are
there still decisions to be made on --

MR. FLEISCHER: No, there are still decisions to be made. There
are still consultations underway.

Q And Senator Kennedy has said he would submit a resolution in
Congress requiring the government to present evidence to Congress, as
well, before undertaking any force against Iraq. Is that something you
can work with Congress on? Are those concerns you're prepared to
address?

MR. FLEISCHER: I haven't seen the Senator's proposal yet.
Obviously, there are a tremendous number of congressmen and senators
who believe the President has made a compelling case. There are many
who have already voted and authorized the President to make the final
judgments about whether to go to war or not. And that resolution was
passed last Congress, with overwhelming bipartisan support. I don't
remember how Senator Kennedy voted on it. But the President will
continue to reach out and talk to a number of people.

MR. FLEISCHER: We'll give it to you as -- what you're seeing now,
in the wake of the State of the Union, is going to be a series of
follow-on events by the President to focus on the initiatives that he
launched. And among those initiatives, of course, is the Medicare and
prescription drugs initiative.

But some of the others, of course, are the program of the hydrogen
fueled vehicle, which I think, frankly, is one of the more innovative
and unnoticed provisions in there. It really leapfrogs a lot of the
current debate about how to protect the environment and the economy,
while developing a totally new type of car. I mean, this is pushing
the envelope of technology.

Other initiatives, of course, are the Children at Risk Initiative,
with mentoring, conquering addiction, the AIDS proposal the President
made, the BioShield proposal the President made and strengthening the
intelligence system to protect people through the Counter Terrorism
Information Center. These are all new initiatives part of the State of
the Union. The President will be going to the country on all of these
new initiatives. So there will be more -- yes, more travel, more focus
on each of the individual initiatives.

Q The only initiative that didn't have a timetable attached with
a dollar figure, so far as I could find, was the fuel cell initiative;
$1.2 billion over what period?

MR. FLEISCHER: I don't remember, Scott. That's part of why we'll
have a background briefing with a policy expert in detail this
afternoon.

Q Ari, doesn't that fuel cell proposal also seems to leap-frog
advances that could be made in the shorter-term, where the government
is focusing its support on what Bush said, a child today -- born today
may be able to take advantage of this, but in the mean time, what is
the government to support the fuel --

MR. FLEISCHER: In the meantime, the President is asking Congress
to pass his Clean Skies initiative, which will reduce emissions by 70
percent, if I recall off the top of my head. The President's global
climate change -- a 70-percent drop in nitrogen oxide, sulfur dioxide
and mercury, under his Clean Sky Initiative.

Q That doesn't apply to vehicles at all, does it.

MR. FLEISCHER: No, but this is all part of the changes that can be
made between not and the interim period. Of course, the administration
has administratively moved on light trucks to increase the mileage
standards. The Congress has voted overwhelmingly and bipartisan that
the command and control system for CAF for all auto vehicles is not an
appropriate way to proceed.

One of the things the President is doing in this new proposal is to
try to break the paralysis in Washington about how best to protect the
environment, because there is insufficient support on the area of
vehicles, in both parties, to do some of the things that some people
have advocated. These issues have not gotten us anywhere. These
issues have gone down a dead end road. There is insufficient support
to pass some of these things in both parties.

So the President is looking, how therefore do you bring people
together about something that gets the job done with new thinking and a
new way. This is new thinking. This is one of, I think, the most
interesting ways of doing business differently to achieve a common
objective that you'll find in government today.

MR. FLEISCHER: As I indicated, we'll keep you informed about the
times of these various rollouts. There's nothing I can indicate today.

Q Can you give us a broad --

MR. FLEISCHER: No, no, it will be shortly, but I don't have the
exact date. I'm not indicating today.

Q Ari, I'm still totally confused on Medicare. You are saying
that every senior, every person in Medicare will get some form of aid
in getting prescription drugs. The form, though, will depend on
whether they're in fee-for-service, managed care, whatever. Is that
what you're telling me?

MR. FLEISCHER: That's exactly right. And that's why the President
focuses on choices and options. Let me put it to you this way. When a
senior is 64 years and 364 -- when a person, a worker is 64 years and
364 days old, they have a wide variety of choices and options available
to them. Take a member of the United States Congress who is 64 years,
364 days old. They, under the Federal Employee Health Benefit Plan,
receive a booklet that has a wide variety of choices and options,
including, as I indicated, fee-for-service, PPOs, HMOs, likely medical
savings accounts. They have a variety of choices in the existing
structures.

They can make every one of those choices until they turn 65. That
next day, under Medicare, they don't have that variety of choices.
Seniors, increasingly, like to have those variety of choices. Not all,
but most do. For those who don't want any changes, no change needs to
be necessary. But for those who do, what the President is proposing is
a way to expand choice, expand options, all the while using your
privately selected doctor with the help of the government to pay the
bills.

Q Will that choice include -- the drug benefits, would that be
available to people who are in the -- who choose to remain in the
existing fee-for-service program, or only a new fee-for-service program
that was part of the President's plan?

MR. FLEISCHER: Well, under the existing Medicare program, of
course, with Medicare plus choice, seniors do have those options,
currently. So this is a way of expanding seniors' options under
Medicare, with government financial assistance.

Q Right, but it's not available in the existing fee-for-service
program.

MR. FLEISCHER: And that's why the President thinks it's important
to modernize Medicare so Medicare with fee-for-service is available to
all seniors as a matter of their choice.

Q And those who stay in the fee-for-service, not the expanded,
will still be able to get some help in getting private insurance,
private coverage for drugs, for prescription drugs?

MR. FLEISCHER: Well, if you get private insurance, then you're not
getting -- that's above and beyond existing Medicare.

Q You just said that even those who stay in fee-for-service will
get some help in getting prescription drugs. What form does that
take?

Q But this fee-for-service that you're talking about would be
part of a -- a new part of Medicare, not the existing fee-for-service
program?

MR. FLEISCHER: This is all part of Medicare. This is how you can
expand Medicare to give people more options and choices.

Q So every -- what is it, 40 million people under Medicare would
be eligible for a prescription drug benefit?

MR. FLEISCHER: That's correct.

Q Under the President's plan.

MR. FLEISCHER: That's correct.

Q But would they have to change plans?

MR. FLEISCHER: It's their option about what plan would work best
for them, of course.

Q Right. I mean, I want to -- it sounds like what everybody is
saying is if you're in Medicare now under the traditional
fee-for-service plan, you're going to have to pay extra in order to get
prescription drug coverage -- is that correct? You may get some
government subsidy, but you will have to -- it would be an option on
top of your existing coverage?

MR. FLEISCHER: The pricing structures have not been set, but this
is why this is an expensive initiative. This is why the President has
proposed $400 billion over 10 years, because there's going to be a
tremendous federal role here. The President thinks it's appropriate.